PARAGRAPH 277-LEMONS. 84 cents freight) Sicily had an advantage landed at New York of $0.133. The advantages of the Sicilian lemon in the California estimates, of 1910 and 1913, are more than overcome by the difference in price of 25 cents to a dollar which the California lemon box brings over the Sicilian lemon box at New York. To this should be added the further advantage that the Californians have in the local freight rate that the Sicilian box pays as it moves inland from New York. These figures show that the California lemon needs no tariff protection from the Sicilian lemon, and this is true even if the California estimates of 1908, 1909, 1910, and 1913 are correct. In our opinion, founded upon such facts as we have been able to learn, and such evidence as we can procure, and from our general knowledge of the industry, we believe that the estimates of 1908, 1909, 1910, and 1913 are altogether too high, and our opinion is substantiated by the report of the Limoneira Co. as of January 1, 1910, filed by us as an exhibit at the time of the hearing, which shows that the cost of the average box of lemons f. o. b. California of this company in 1907 was $1.21809, in 1908 $1.31433, and in 1909 was $1.27765. These figures do not represent charges for taxes, deteriorations, cost of bookkeeping, and maintenance of office and other general expense items incident to the proper conduct of the business, but these charges can only amount at the outside to a few cents per box. The Limoneira Co. is undoubtedly one of the most efficient producers of California lemons, and its cost of producing a box of lemons f. o. b. California is undoubtedly somewhat lower than that of corporations or individuals that are not as efficient, but efficiency should be a basis for an estimate of cost on which to base a tariff law. The Californians are asking that a tax be placed on a necessity of life, the burden of which has to be borne by the whole American people for the exclusive benefit of a few counties of southern California, so that California is not justified in claiming protection on inefficiency, but should only ask for protection, if required, on efficiency. The importers' figures of cost substantiated.-While the production costs of Italy are not important, for the reasons given above, it is only just to the importers to call attention to the fact that the price which the importers paid for lemons for export to the United States, as shown in the statements from their books which are filed with this committee, are substantiated by the report of cost of producing lemons in Sicily, made by Mr. Nicolo Marasa, one of the most noted pomologists of Italy, which report was filed with this committee, and also by the estimates of cost of growing lemons in Sicily given in the brief of the Italian Chamber of Commerce of New York, filed with this committee; and these prices are further corroborated in the report of the United States Consul De Soto, given in the United States Daily Consular Reports, dated January 16, 1913, at page 286. Fluctuations in prices of lemons. The prices of lemons in the United States are determined by the law of supply and demand. Owing to the frequent scarcity in the supply, the demand causes the price to rise rapidly and then drop just as quickly as soon as the deficiency in the supply is made up. The California remedy to stop the sudden rises in price is to cut off more of the supply (thereby keeping up the constant shortage, with the consequent high prices) by shutting out the foreign lemon in the expectation that some day in the future California will produce enough lemons to supply the full demand. The importers' remedy is to increase the supply by a constant even importation coming in, thus keeping the supply equal to the demand and in that way prevent the sudden rises in price. We are fully satisfied to leave the decision as to which method is more desirable to the judgment of your committee. In conclusion, we desire to state that the evidence adduced at the hearing conclusively showed the existence of a California fruit trust without domestic competition, controlling its product absolutely and obtaining for it the highest possible prices through the operation of a prohibitive tariff on its products. We therefore feel that it is time the American people were freed from the exactions of this trust and that can be best accomplished by placing lemons on the free list. Respectfully, yours, G. DOMINICI, JANUARY, 1913. FRANK ZITO, Committee. HARRISON OSBORNE, Counsel. PARAGRAPH 277-LEMONS. TESTIMONY OF G. HAROLD POWELL, LOS ANGELES, CAL., REPRESENTING THE CITRUS PROTECTIVE LEAGUE OF CALIFORNIA. The witness was duly sworn by the chairman. Mr. POWELL. Mr. Chairman and gentlemen, I represent the Citrus Protective League of California, which is an organization that represents the growers and shippers of citrus fruits in handling the general questions which affect the industry. The Citrus Protective League of California recommends that no change be made in the rates of duty under Schedule G, agricultural products, etc., of the tariff act of 1909. I ask permission to file a brief and also to file a supplementary statement entitled the "Lemon industry of Italy, Bulletin No. 10 of the Citrus Protective League of California," which sets forth the results of an investigation of the citrus fruit industry of Italy. The CHAIRMAN. Do you want those simply filed or printed? Mr. POWELL. I would like to have them filed and printed in the record. The CHAIRMAN. They will be printed in the record. Mr. POWELL. I would like to speak of the box shook question that the last speaker touched on. The use of American box shooks has not followed the fluctuations in the current of imports of Italian lemons into the United States, nor has it fluctuated with the different rates of duty established by Congress. In 1906 the exports of lemons from Italy to the United States amounted to 137,968,259 pounds. The duty collected on American-grown packages was $22,166.40. In 1908 the exports from Italy to the United States increased to 178,051,782 pounds. The duty collected on American-grown packages decreased to $10,241.25. The increase in the imports of lemons in the two years was 29 per cent. The decrease in the duty on American-grown packages was 53.8 per cent, though the duty on both the lemons and the packages remained the same. In explaining the decreased use of American box shooks the American consul at Palermo has the following to say: Upon looking into the reason of the falling off of the use of American box shooks for the manufacture of boxes, which is pointed out in your letter of July 11, American beechwood has been found too soft and less durable than the Austrian. Mr. POWELL. A speaker this morning referred to a report by Mr. Powell, of the United States Government, appearing in the Yearbook of the Department of Agriculture for 1907 in which it was stated Mr. Powell showed that the cost of producing lemons in California was $1.06 a box. The report contains no such statement. It gives the cost of producing lemons in a certain individual grove, and the statement has been made out by taking an individual grower's account with general returns and making out an account of that kind. Mr. HARRISON. You are the Mr. Powell to whom you refer? Mr. POWELL. Yes, sir. Mr. HARRISON. For how many years were you connected with the Department of Agriculture? Mr. POWELL. About 10 years. PARAGRAPH 277-LEMONS. Mr. HARRISON. When did your connection with the Department of Agriculture terminate? Mr. POWELL. Two years ago. Mr. HARRISON. When did you become connected with the California Citrus Protective League? Mr. POWELL. The 1st of January two years ago. Mr. HARRISON. At the time you became connected with that league you severed your connection with the Department of Agriculture? Mr. POWELL. Except as consulting pomologist. Mr. HARRISON. Then you are still connected with the department? Mr. POWELL. I am not; no. I severed my connection with the Department of Agriculture a short time after I became manager of the California Fruit Growers' Exchange. Mr. HARRISON. Are you not still carried on the rolls of the Department of Agriculture? Mr. POWELL. No, sir; I am not. Mr. HARRISON. And you are not now receiving a salary from the Department of Agriculture? Mr. POWELL. No, sir. Mr. HARRISON. Not in any amount? Mr. POWELL. Not in any amount; no, sir. In leaving the Department of Agriculture I was requested, as many employees are, to remain on the rolls as consulting experts of some sort or other, and I remained at $1 a year-which is the usual way of handling matters of that kind as consulting pomologist of the United States Department of Agriculture. Mr. HARRISON. And you still occupy that position? Mr. POWELL. When I became manager of the California Fruit Growers' Exchange, this commercial organization, I resigned as consulting pomologist of the United States Department of Agriculture, and I have not been carried on the rolls since. The report of Mr. Teak, which was referred to this morning, is an unusual report. That is a historical document back from 1909, and the figures shown in there include, in addition to lemons, 500 acres of walnuts, 500 acres of corn land, 200 acres of alfalfa, and 2,000 acres of cattle land. The report that was referred to of the cost of producing lemons in California, $1.48 per box, as above, is before this committee for you to see the result of an investigation of selected groves, made at about two weeks' time before the hearings of the committee. That report showed about $1.48. The first comprehensive investigation of the cost of producing lemons in California was made at the time of the hearings before the Interstate Commerce Commission, and as the result of a very exhaustive investigation the commission found it cost $1.83. Mr. McCALL. Is that on the farm as they are, unwrapped, or is it ready for shipment? Mr. POWELL. That is ready for shipment. Mr. MCCALL. The distinction was made this morning between those two different conditions. Mr. POWELL. That covers the cost of production, handling, etc. The commission established at this investigation that it cost $1.83 PARAGRAPH 277-LEMONS. f. o. b. to produce lemons in California. Since that time a complete investigation has been made of a large number of representative groves in California. As a result of that investigation we showed that it cost to produce on the average in California and load on the cars $1.888 per box, the total cost being approximately what was shown before the Interstate Commerce Commission, $1 a box, the cost of handling from the trees being 88.8 cents a box. That investigation was the most careful that has been made of any agricultural industry in this country or abroad. Referring to the question that was brought up this morning of the method of selling fruit, 15 or 20 years ago the growers of California consigned their fruits to eastern markets. The markets were 2,000 miles or more distant, on an average. In handling their business at that distance it was impossible to make good advance arrangements, secure prompt collections, or make complete collections. It was impossible under those conditions for the growers to have proper care for their fruit in transportation, to see that the cars were properly ventilated, or to see that the fruit was in proper condition. It being located so far away and not being able to make these collections, they were obliged to organize an agency for the purpose of providing facilities through which they themselves could market their fruit. At the present time there is one organization in California of which I am manager-the California Fruit Growers' Exchange-which handles 75 per cent of the lemons grown in California and 65 per cent of all citrus fruits grown in California under the following conditions. The average stated this morning was 85 per cent, which is incorrect. There are 6,500 growers in the Californía Fruit Growers' Exchange. The growers formed a nonprofit corporation, and in the packing house which they provided assembled the fruit and prepared it for shipment. These organizations, of which there are about 115, have formed what is known as the California Fruit Growers' Exchange, which is an agency which provides the facilities through which these producers handle and market their own crops. The California Fruit Growers' Exchange, the central agency, furnishes bonded agents in the different markets of this country and of Canada, placing them under bond and under instructions. The shipper of the fruit utilizes those agents, dealing directly with them, the shipper himself determining the destination, determining the market, determining the diversions, determining the price which he is willing to accept for a car of fruit sold in any particular market. The California Fruit Growers' Exchange is the agent in providing the facilities for this cooperative nonprofit corporation, the exchange itself being a nonprofit corporation and acting for the growers at the actual cost. Mr. PowELL. I wish to read at this point the reserved rights which the shippers have, the relations of which are defined in contracts between the California Fruit Growers' Exchange and the associations. They read: The reserved rights of shippers. It is understood, however, that each shipper reserves to itself the right to regulate and control its own shipments, to use its own judgment, to decide for itself when and in what amounts it shall ship; to what markets it shall ship; where its products shall be sold, and except at auction points the price it is willing to receive; fully reserving the right of free competition with all other shippers, including other members of this organization, unhampered and uncontrolled by anyone. PARAGRAPH 277-LEMONS. That is the system of cooperation under which 95 per cent of the citrus fruits of Čalifornia are distributed to the markets of this country, the exchange itself never fixing a price, never determining the destination or the market or diversion or anything affecting the control of a car. The CHAIRMAN. Your time has expired, but I want to ask you some questions. Some of the committee desire to hear you further on this trust question. Mr. NEEDHAM. I think he ought to have 30 minutes. The CHAIRMAN. The time of the other men was taken up in crossexamination. The committee desires to let Mr. Powell proceed further. Without objection you may proceed for five minutes. Mr. McCALL. I would like to ask what proportion was sold under the reserved rights system Mr. POWELL. All of it was sold under the reserved rights system. About 33 per cent of all the lemons that go out of California are sold at public auction, and about 65 per cent of all the lemons consumed in the United States are sold at public auction; under those conditions there being no way in which a price could be fixed except the price which the public is willing to pay. Mr. HARRISON. At what cities are the lemons sold by auction? Mr. POWELL. Boston, Philadelphia, New York, Baltimore, Pittsburgh, Cleveland, Cincinnati, St. Louis, and New Orleans. Mr. HARRISON. Are those markets governed entirely by auction sales? Mr. POWELL. Yes, sir; the rest of the fruits in the other cities of the country being sold at private sale in open competition with imported lemons. Mr. HARRISON. You tell us, then, that no California lemons are sold in the New York market except by auction? Mr. POWELL. Not by the California Fruit Growers' Exchange. Our entire business is handled in New York by auction and in no other way. The same applies to all these other markets I have mentioned. In connection with this lemon industry the total consumption of lemons in this country represents about 12 lemons per year per capita, and a tax levied upon the people of this country of between 3 and 4 cents per year per capita. The question of the use of lemons in hospitals was brought up this morning Mr. PALMER. I do not understand that statement about the tax. Mr. POWELL. That is the tax that might be levied upon the consumer on account of his per capita consumption. Mr. PALMER. Are you dividing the duties? Mr. POWELL. The total population is about 100,000,000 people. Mr. PALMER. You are figuring on the duties collected? Mr. POWELL. Yes, sir. It would be about 3 to 4 cents. Mr. KITCHIN. You are adding 14 cents per pound on all lemons? Mr. POWELL. Adding 14 cents a pound on all lemons and dividing it into the annual consumption in this country. Mr. PALMER. Domestic as well as imported? Mr. POWELL. Just imported. Mr. PALMER. You do not mean that is the tax they pay? |